The transformation of Africa was the theme of Equatorial
Resources’ presentation to over 400 WA Mining Club members
and guests at the Club’s monthly luncheon in July. Former
Wallaby and investment banker, John Welborn, now Managing
Director and Chief Executive Officer of Equatorial Resources,
detailed the challenges of operating in the Republic of Congo
as well as the opportunity and momentum behind an emerging
mining jurisdiction where the mining boom is just beginning.
John Welborn is bullish about Equatorial’s iron ore assets
in the Congo and the potential for the region as a whole.
“
It is simply a case of ‘when’, not ‘if’, for Africa. There is an
ever-increasing global demand for steel and despite expansion
by existing miners, the world will continue to need new sources
of iron. We are increasingly confident that Africa has an
iron future.”
Equatorial operates in the Republic of Congo, and John
Welborn is quick to point out this is “French Congo”, “Congo-
Brazzaville” or “Little Congo” – a completely separate and very
different country to its neighbour, the Democratic Republic
of Congo.
The company is well positioned in Congo to take advantage
of, and be a catalyst for, the ongoing positive economic and
social transformation of this former French colony. Equatorial
holds four exploration licences for iron in the Republic of Congo
and has been operating there since 2012.
2013
has been a big year for Equatorial with the completion
of a number of key milestones at its flagship Mayoko-Moussondji
iron project in the south of the country, including a maiden
resource of 767 million tonnes and the recent release of a very
positive scoping study for the project. Mayoko-Moussondji has
the advantage of access to a railway which runs through the
main project area to the deep water port of Pointe-Noire.
“
The key advantages of Mayoko-Moussondji are the
potential to produce a premium-grade iron product, access to
existing transport infrastructure, and the possibility for future
expansion in what could become a globally significant iron ore
region,” said John Welborn.
“
The scoping study detailed a three-stage development
plan with Equatorial’s current focus on developing an initial
two million tonnes per annum operation. The capital required
for this is $231 million, which makes Mayoko-Moussondji one
of the lowest capital intensity iron ore developments globally.”
With expected operating costs within the first quartile of the
global cost curve, John Welborn is confident the project will be
funded and is confident in a short timeline to production. His
view is supported by recent independent research with GMP
Securities announcing: “We believe that Equatorial is one of the
best positioned iron ore development stocks globally”. Morgan
Stanley and Blackswan Equities have also endorsed Mayoko-
Moussondji, both welcoming the achievable funding target of the
staged development and recognising the obvious synergies and
benefits of the nearby Mayoko-Lekoumou iron project currently
being developed by South Africa major, Exxaro Resources.
Morgan Stanley has a base case valuation of US$255 million for
Mayoko-Moussondji, with an expected internal rate of return of
33%.
This compares very favourably with Equatorial’s current
market capitalisation of only $85 million, especially considering
the company’s strong cash balance.
John Welborn identifies a strong analogy between Australia’s
development of the Pilbara iron ore mines in the last 50 years
John Welborn
Managing Director
Equatorial Resources Ltd
The Mayoko-Moussondji project has access to a railway
which runs to the deep water port of Pointe-Noire
Africa’s ironorereality
Equatorial looms large
Minesite 2013
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